Recent financial frauds in China such as Kangmei Pharmaceuticals’ case have raised suspicion in the capital market and among academics about the reliability of accounting information of listed companies, and as a result, various non-financial information that is compulsory or encouraged to be disclosed by regulators and voluntarily disclosed by listed companies is gradually gaining attention from various stakeholders and academics. The corporate social responsibility (CSR) information is one of the most widely disclosed non-financial information by listed firms, but its reliability and motivation are also questionable, for example, is CSR commitment affected by firms’ financial information quality? Using China a-share listed companies that disclosed their corporate social responsibility reports from 2009-2019 as a sample, we investigate whether earnings management can influence corporate social responsibility by analysing the management’s motives embedded in earnings management, in order to further examine whether Chinese listed companies are morally motivated to undertake social responsibility or use social responsibility as a strategic tool to maintain the reputation of the firm and the management. The results of the study show that earnings management and CSR are positively correlated, and the finds continue to be robust when using 2SLS, Heckman two-step regression and propensity score matching to control for reverse causality and self-selection bias, proving that China's listed companies are ethically motivated to fulfil their social responsibility. Therefore, it is important to focus on the quality of earnings information in order to perceive the motivation of CSR when evaluating a company’s CSR commitment.

How to shape a firm’s stock price resilience in the increasingly uncertain environment has become an important topic. This paper investigates the effect of important market participantsfinancial analysts-on stock price resilience. Based on data from 3,444 listed firms from China, we find that firms with higher analyst coverage are more resilient during the Covid-19 induced crisis, which is manifested by a lower pandemic-induced decline in stock price, shorter duration of decline period, higher recovery probability, and shorter duration of the recovery period after the shock. This positive relationship is more prominent for small firms but does not depend on ownership type, and the ratio of star analyst coverage. Further channel tests show that analysts could help in attracting attention from media and institutional investors, improving corporate governance, and reducing financial constraints, which in turn enhance the ability of stock prices to absorb pandemic shocks.

This paper examines the ‘certification’ of government venture capital (GVC) programs, disputes whether the Chinese government venture capital (CGVC) can promote target firms’financing through the ‘certification’ on target firms, and how the ‘certification’ work. Using a dataset of 87865 Chinese listed firms over 2008–2018, we confirmed that CGVC’s investment promotes target firms’ equity financing but inhibits corporate debt financing through the certification effect and CGVC’s reputation. Moreover, the high reputation of GVC and high market awareness could strength the ‘certification effect.’Simultaneously, the ‘certification effect’is only effective for early and late-stage firms and private-owned firms, and invalid for mature stage and state-owned firms.

In this paper, we construct a content analysis structure to explore whether corporate governance information in voluntary disclosures can predict management expenses in the next term. Employing the site visit information disclosure of firms listed on the Chinese A-share market from 2012 to 2021, we find that corporate governance information disclosure is motivated by ownership concentration,and that corporate governance information can predict management expenses and comprises incremental information, indicating that the content analysis we construct is valuable and the disclosure of corporate governance information can mitigate the agency problems.There is a difference between state-owned listed firms and nonstate-owned listed firms.

Rising concern over the impact of Chinese industrial policy has led to severe trade tensions between China and some of its major trading partners. In recent years, foreign criticism has increasingly focused on the so-called "Made in China 2025" initiative. In this paper, we use information extracted from Chinese listed firms' financial reports and a difference-in-differences approach to examine how the "Made in China 2025" policy initiative has impacted firms' receipt of subsidies, R&D expenditure, patenting, productivity, and profitability. We find that while more innovation promotion subsidies seem to flow into the listed firms targeted by the policy, we see little statistical evidence of productivity improvement or increases in R&D expenditure, patenting and profitability. This paper suggests that the “Made in China 2025” initiative may have not yet achieved its target goals.

This paper examines the effect of corporate social responsibility (CSR) on the future stock price crash risk using a sample of Chinese listed firms. We employ the divergence of CSR ratings for measuring the unmeasurable outcome uncertainty, and find that conditional on firms’ CSR performance, future stock price crash risk will arise with the CSR divergence. Further results show that the moderating effect is more pronounced for firms with weaker investor protection or higher agency costs. We conclude that firms with higher CSR divergence have more severe agency problem which is complementary to the literature where stakeholders’ theory dominates.

More than one in five listed firms in China initiate dividend payments during the year right before their initial public offerings (IPOs). This tendency, which seems to contradict the purpose of raising capital, constitutes the pre-IPO dividend puzzle. This paper examines this puzzle using manually collected Chinese data from 2006 to 2019. We find that firms initiating pre-IPO dividends tend to have lower IPO underpricing than non-initiating firms. We also find that the effect of pre-IPO dividend initiation on IPO underpricing is more pronounced for firms with stronger pre-IPO growth and profitability. Additional analyses indicate that initiating firms have better pre- and post-IPO operating performance and post-IPO stock performance. Moreover, initiating firms pay more dividends and have significantly higher investor attention after the IPOs. Collectively, the pre-IPO dividend initiation is not a short-term strategic behavior of low-quality firms but is intended to send positive signals and improve investors’ stock valuation.

This paper examines the association between acquisition performance commitment and earnings management in an emerging market where investor protection mechanisms are not well established. Based on a sample of acquisition transactions by listed firms in China during 2008-2017, we find evidence that firms committed to certain performance targets in acquisition transactions tend to engage in earnings management to meet their commitments. This phenomenon is more pronounced at the later stage of the commitment period. Further, the positive relation between performance commitment and earnings management is attenuated by a stronger governance structure. Finally, we find firms that managed to just meet performance targets experience worsened accounting-based and market-based performances and higher probability of goodwill impairments immediately after the commitment period. This paper contributes to the acquisition literature by providing evidence from an emerging market of post-contractual opportunistic behavior.

This paper examines the impact of air pollution on media slant of public listed firms in China. Using air quality and media data at the city level, we find that lower air quality generally leads to lower media slant. When the air quality changes from lightly polluted to heavily polluted, the number of negative sentences increases by about 2%. Our subsample analysis shows that the effect of air pollution on media slant is similar for large and small firms but is stronger for non-SOE firms. Furthermore, the effect of air pollution on media slant is stronger for firms of non-heavily polluted industry than for firms in heavily polluted industries. These results suggest that air pollution affects media slant.

Skewness preference, the tendency to overweight the probability of extreme tail events, can affect managerial decision making. We find that Chinese listed firms managed by CEOs who experienced a largely unpredictable rare event, namely the outbreak of Severe Acute Respiratory Syndrome (SARS) in 2003, during their earlier executive careers have lower stock price crash risk measured by negative skewness. This effect especially matters for CEOs whose experienced events are more salient. Furthermore, professional epidemic experience induces CEOs to deter stock price crashes through altering financial reporting strategies. Overall, entrepreneurs’ skewness preference can reduce the negative skewness of stock returns.